When the landscape of biotech patents changed in India

In February 2016, the Department of Biotechnology, Ministry of Science & Technology, Government of India (DBT) organized a two day ‘Global Biotechnology Summit’ to deliberate on prospects, and jointly work together to evolve an action plan to accomplish a USD 100 billion biotech sector in India by 2020.

‘Through its wonderful work, the DBT has been actively contributing to some of the key initiatives of the government and contributed to multifarious areas like healthcare, agricultural, environmental and industrial, we are ready to launch the start-up ecosystem which will contribute immensely to achieving our target of US$100 billion by 2025’, said Y S Chowdhury, Minister of State for Science and Technology.[1] Addressing the gathering, Nirmala Sitharaman, Minister of State for Commerce & Industry, said India is today moving forward rapidly to be an innovation nation and Indian biotechnology is poised to provide solutions to a large number of challenges that we face in health, food and environmental sectors. The solutions that India offers are of relevance both nationally and globally. A dynamic and vibrant biotechnology industry is one of the main engines of Innovation.

Patent filing trends

Out of the total filings of 46,904 patent applications as published in the annual report of 2015-2016, approximately 10% was from the field of biotechnology, which included biomedical, bio chemistry, pure biotechnology and likewise. While there has been a gradual growth in patent filings, applications in the field of biotechnology have diminished. This however is consistent with the global trend and particularly due to the strict patentability criteria and the severity in deciding what could be a patentable invention.

It is in this context and issue of high parameters of deciding patentability of biotechnology applications, this article would discuss one of the landmark cases in this field and the changes that it bought forward in the patentability landscape of Indian biotech industry.

Facts of the case

The claimed matter of a patent application filed by the appellant, DIMMINACO A.G., involved, an invention relating to a process for preparation of infectious bursitis vaccine to prevent a dangerous epidemic amongst poultry chickens. The application was examined by the Patent Office Examiner (Examiner) under section 12 of the Patents Act (Act). In the examination report, the Examiner gave a finding that what was claimed in the said application did not constitute an invention under section 2(i)(j) of the Act. The Examiner further expressed that invention was one of the classes as specified in section 5(a)/5(b) of the Act as the substance prepared by the process was capable of being used as food/drug, and the process involved could not be deemed to be ‘manufacture’, as the resultant ‘product’, being ‘vaccine’, contained ‘living entities’. Hence, the examination report disallowed the claimed ‘process’ on the basic ground that it did not constitute ‘invention’ under section 2(i)(j).

The said ‘findings’ of the Examiner were upheld by the Supervising Controller of Patents after official hearing, by his written decision. Apart from endorsing the Examiner’s findings, the said decision also held that no patent could be granted according to the statutory prohibitions laid down in the then Act, for any process which eventually produced a substance containing living entities/organisms. This is primarily because such process was deemed to be a ‘biotechnological process’. In other words, there was no scope for any applicant/inventor to cause any process and/or product, even if those were found to be novel with ‘inventive step’, to be patented under the Act.

The applicant challenged the said decision before the High Court of Calcutta, mainly, on the following grounds:

a) in response to the argument of the Examiner that it was not a manufactured product, the applicant argued that there was no statutory bar in the then Act to disallow a novel process with inventive step(s) for production of a substance on the alleged ground of ‘not a manufacture’, particularly when there was no statutory definition of ‘manufacture’ in the Act;

b) in absence of any such statutory definition, dictionary meaning of ‘manufacture’ ought to be considered, as held by the Supreme Court;

c) the dictionary meaning of ‘manufacture’ clearly includes any novel/inventive process, which results in vendible / tangible product / substance;

d) the Examiner totally failed to assign any plausible reasons in support of his whimsical and arbitrary findings, being not supported by law, and the Supervising Controller, being “Assistant Controller”, blindly supported that;

e) unreasoned decision/findings are against the Constitution of India;

f) the resultant product/substance, being the ‘vaccine’, of the claimed process, is vendible, and debarring a patent on said ‘process’, excludes the applicant/inventor from their deserving monopoly right on the ‘invention’ though that fulfills all criteria of the concerned Section 2(1)(j) of the Act;

g) consequently, the vendible vaccine, introduced by the applicant for the first time, pursuant to thorough R & D, and which is very much beneficial to the public at large, will be ‘public property’, without any ‘recognition’ to the ‘introducer’, that being against the basics of patent system’; and

h) in the impugned decision of the Assistant Controller, it was expressed that according to the administrative policy of the central government, patent was not to be granted for any biotechnology-related subject matter. The claimed process, though biotechnological in nature, and produces vaccine containing living micro-organisms, cannot be equated with ‘cloning’, because, it is not immoral, which is specifically prohibited under the Act, applicable to ‘cloning’ or the like.

Based on the pleadings and evidence put forward by both the sides during the hearing, a landmark judgment was delivered by the High Court, wherein all the issues were categorically dealt with. In particular, the court stressed on (a) ‘vendibility’ test; (b) lack of statutory support against presence of living entities in the resultant product of any novel and inventive process, unless question of ‘immorality’ arises; (c) unreasoned, whimsical, arbitrary and unconstitutional findings and contention of the Examiner and Assistant Controller; (d) no administrative policy can override the statutory provision. The following issues, raised in the impugned decision, were overruled by the High Court:

The Assistant Controller was of the opinion that if the term ‘manufacture’ was to be given such a wide meaning, there would be further problems as ever going new process with foreign sophisticated technologies would have to be patented in India. The Assistant Controller therefore, wanted to probe the intention of the legislature in ascertaining the term ‘manufacture’ and, as such, relied on the recommendation of Justice Rajagopalan Iyenger on the earlier Patent Bill, 1953. The Assistant Controller further held that the definition of ‘invention’ under section 2(i)(j) of the Act is substantially identical with the definition, recommended by Justice Iyenger as published in 3rd paragraph of page 130 of the report of the Patent Enquiry Committee.

The Assistant Controller further held that the original definition of manufacture as provided in clause (i) of section 2 of the Patent Bill, 1953 was not accepted in view of the recommendation of Justice Iyenger. The Assistant Controller was, therefore, also not in favour of accepting the wider meaning of the term manufacture. Therefore, Assistant Controller found that the process of preparing vaccine which contains living virus could not be considered manufacture.

The Assistant Controller further held that a vaccine with living organism could not be considered a substance, and that an inanimate object could be described as thing or item but not a living one and the specific finding that living micro-organism could not be considered an inanimate aspect as it could not converted physically or chemically to any other product.

Therefore, in the impugned decision, the Assistant Controller held that the subject matter of the specification did not constitute an invention and the said patent application was, therefore, rejected.

During the hearing of the appeal, the applicant’s counsel particularly referred to a famous U S Supreme Court case (“Diamond- vs- Chakrabarty”) of 1980, which declared ‘biotechnology’-related subject matter to be patentable, holding the maxim: ‘anything under the sun, which is made under human control – is patentable’. Pursuant to said ruling, biotechnology-related inventions became patentable in USA.

Thus the ‘vendibility’ test was applied by the court, to conclude whether the claimed method related to a process of manufacture. The invention must qualify the following under the ‘vendibility test’:

a) consequent to the creation of a vendible item;

b) progress or reinstate the previous condition of a vendible item; or

c) conservation of a Vendible product from degeneration

In the court’s opinion, ‘since the process results in a vendible product, it is certainly a substance after going through a process of ‘manufacture’. In effect, a long-pending issue on non-patentability of biotechnology-related process/ product was legally resolved in India. The Government of India did not prefer appeal against said ruling of the High Court, but amended the Act to allow ‘bio-tech’ patents.

With a forecast of the biotech industry reaching US $100 billion by 2025, biotechnology segment is the fastest growing segment in India. Furthermore, growing at a faster pace, in comparison with the previous years, the Indian biotech industry witnessed YoY growth of 57.14 per cent in FY16; the total industry size stood at US$ 11 billion by FY16 and is estimated to reach US$ 11.6 billion by FY17. [2]

This growth pace is propelled by several factors, robust government initiatives, intensive R&D and an increasing demand being a few of the major ones. The industry is receiving sound investments from both government and several VCs.

Co-author: Raka Roy – Head of Trademarks, United Trademarks and Patent Services, Dubai.

Raka Roy is currently the head of trademark department in the Dubai office of the firm. In her present role, she oversees the entire prosecution, dispute resolution and commercial IP department in the MENA region. Raka is also a qualified patent agent and has more than 15 years of experience in intellectual property law.

Raka has also been elected as the chairperson for the Asia Pacific and Africa subcommittee for parallel imports in International Trademark Association in US and is presently serving the committee in that capacity.

Author: Samaresh Chakraborty

Samaresh Chakraborty is a senior lawyer with a technical background having degrees in Science and Engineering. He has been practicing in the field of IPR for about 45 years. He is a member of various professional associations worldwide, including International Bar Association, Chartered Institute of Patent Attorneys, London, Federation of IPL Counsel, EU, and Institute of Engineers.